Today's Hack

A recent article in The Hill paints the EARN Act (Enhancing American Retirement Now), the Senate’s version of the House’s Secure Act 2.0 bill, in a negative light as primarily a tool to give a tax break to rich Americans in a way that ultimately adds to the national deficit and only circumvents problems instead of solving them. We’ll breakdown the article on today’s episode and share our opinion on what it gets right, and wrong…

What is the EARN act and how might it impact your retirement plans? On today’s episode, we’ll discuss a recent article that breaks down the EARN (Enhance Your Retirement Now) Act and what it means to you.

This is the Senate’s version of the Secure Act. The main focus would push back RMDs to age 75. As a planner, three extra years of tax-free growth can be beneficial for those clients that want to do conversions.

The reality though is that Americans need to get to that money before 75. So those that don’t have a lot of assets won’t feel the benefit as much. But, at the end of the day pushing RMDs back is great for investors.

Next, the bill allows for an additional $10,000 in savings between the ages of 60 and 63. According to this article, is that a bad thing? This is a great benefit for those trying to catch up on their retirement savings, that can do so. Once you get over 50, being able to stock more away becomes more and more important.

Roth conversions have been extremely popular over the past few years. It’s all about paying taxes now or later. If you’re lower-income especially, this tool can help diversify your tax buckets in retirement. While this article tends to look down upon Roth conversions, we’d have to disagree.

More about the article discussed today: https://thehill.com/policy/finance/3534883-senate-retirement-bill-benefits-wealthy-americans/

[1:17 ] RMDs at age 75

[5:34] Additional $10,000 in savings

[8:23] Are Roth conversions are bad?

A Quotable Moment:

“Personally, I think a Roth is a great tool today. Under the laws we have today, take advantage of it because I don’t expect it to be there in this form for long.”

-Phil Putney

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